Lower growth goals in sync with ADB forecast

THE government’s decision to revise its growth expectations downward at the Development Budget Coordination Committee (DBCC) meeting on Wednesday is consistent with Asian Development Bank (ADB) expectations for this year.

In its Asian Development Outlook supplement (ADOs) released on Wednesday, the Manila-based multilateral development bank maintained its growth and inflation forecasts for the Philippines.

The ADB said GDP growth will average 6 percent in 2019 and 6.2 percent in 2020, while inflation is expected to average 2.6 percent in 2019 and 3 percent in 2020.

“GDP growth is seen accelerating in the fourth quarter of 2019 and throughout 2020, supported by investment as more infrastructure projects come onstream. Accommodative fiscal and monetary policies will support domestic demand,” ADB said.

The ADB also noted the country’s 6.2 percent GDP growth in the third quarter of the year, saying that it boosted the GDP growth in the January-to-september period to 5.8 percent.

The uptick in GDP growth was supported by the rebound in the government’s infrastructure spending, as well as robust private consumption. The Philippines’s GDP growth and inflation expectations bucked the trend observed in developing Asia.

ADB trimmed its forecast for the region to 5.2 percent in 2019 and 2020, lower than the september forecast of 5.4-percent growth this year and 5.5 percent next year.

The supplement also forecast inflation in the region to average 2.8 percent in 2019 and 3.1 percent in 2020, up from the september prediction that prices would rise 2.7 percent this year and next.

“While growth rates are still solid in developing Asia, persistent trade tensions have taken a toll on the region and are still the biggest risk to the longer-term economic outlook. Domestic investment is also weakening in many countries, as business sentiment has declined,” said ADB Chief economist Yasuyuki sawada.

“Inflation, on the other hand, is ticking up on the back of higher food prices, as African swine fever [Asf] has raised pork prices significantly,” he added.

ADB said growth in the People’s republic of China (PrOC) and India were weighed down by both external and domestic factors.

In southeast Asia, ADB said many countries are seeing continued export declines and weaker investment, and growth forecasts have been downgraded for singapore and Thailand.

UnionBank forecast MeAnWHIle, unionBank’s economic research unit (eru) also released its latest growth forecasts for 2019 and 2020.

The eru forecast the country’s growth to settle at 5.9 percent in 2019, and increase to 6.6 percent in 2020.

It also expects fourth-quarter GDP to reach 6.4 percent despite its GDP nowcast model placing growth at the range of 6.1 percent to 7.2 percent in the October-to-December period.

“This is supported by signals from the seven-year low October imports and historically weak absorptive capacity of government agencies involved in infrastructure projects implementation including local government units [lGus],” the eru stated.

It also said it expects inflation to settle at 2.4 percent in 2019 and 2.8 percent in 2020. Monetary policy would likely average 4 percent in 2019 and 3.5 percent next year.